Macro

Balance of Payments

Medium

The cost of a bag increased from $8 to$ 12 in the US and ₹ 400 to ₹480 in India. What affect it has on the dollar in respect to exchange price?

Revaluated.

Appreciated.

Depreciated.

Devaluated.

✅ Correct Option: 3

Option 1 -> Revaluation is an official government action to adjust currency value upward.

Option 2 -> Appreciation means the currency becomes stronger and buys more foreign currency.

Option 3 -> Depreciation means the currency becomes weaker and buys less foreign currency.

Option 4 -> Devaluation is an official government action to reduce currency value.

Hence, Option 3: Depreciated -> Initially, the exchange rate was ₹400/ $8 = ₹50 per dollar. After the price changes, the rate became ₹480/$ 12 = ₹40 per dollar. Since $1 now buys only ₹40 instead of ₹50, the dollar has weakened or depreciated against the rupee. The dollar's purchasing power decreased in terms of rupees. -> correct

2026: 12 May Shift 1

Official reserve transactions are made to bridge the gap in the Balance of Payment (BoP), they are seen as the ________ item in the BoP.

2022: 19 July Shift 2

The likely impact of an appreciation of the US dollar, on imports of the South East Asian Countries from the US. would be :

2025: 13 May Shift 1

In deficit condition of Balance of Payment if the central bank sells foreign exchange then this particular transaction is known as .......

2026: 23 May Shift 1

Which one of the following is the major advantage of flexible exchange rate system?

2023: 30 May Shift 1

Which of the following are the components of current Account ?

(A) Trade in Services

(B) Trade in Goods

(D) External borrowings

(E) External Assistance

Choose the correct answer from the options given below :

2025: 30 May Shift 2

Gifts, remittances and grants in current account are the components of ?

The cost of a bag increased from 8to8 to 8to12 in the US and ₹ 400 to ₹480 in India. What affect it has on the dollar in respect to exchange price?

Solution

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CUET Economics Past Year Questions (Topic-Wise)

The cost of a bag increased from $8 to$ 12 in the US and ₹ 400 to ₹480 in India. What affect it has on the dollar in respect to exchange price?